diff --git a/README.md b/README.md
index 26249a0..e5649da 100644
--- a/README.md
+++ b/README.md
@@ -136,7 +136,15 @@ Or add to a traditional unix system
 * **aws\_access\_key**: your Amazon S3 access key
 * **aws\_access\_secret**: your Amazon S3 access secret
 * **aws\_region**: the region your S3 bucket is in e.g. *eu-west-1*
-* **existing_remote_files**: what to do with previously precompiled files, options are **keep** or **delete**
+* **existing\_remote\_files**: what to do with previously precompiled files, options are **keep** or **delete**
+* **gzip\_compression**: when enabled, will automatically replace files that have a gzip compressed equivalent with the compressed version.
+
+## Automatic gzip compression
+
+With the `gzip_compression` option enabled, when uploading your assets. If a file has a gzip compressed equivalent we will replace that asset with the compressed version and sets the correct headers for S3 to serve it. For example, if you have a file **master.css** and it was compressed to **master.css.gz** we will upload the **.gz** file to S3 in place of the uncompressed file.
+
+If the compressed file is actually larger than the uncompressed file we will ignore this rule and upload the standard uncompressed version.
+
 
 ## Amazon S3 Multiple Region Support
 
diff --git a/asset_sync.gemspec b/asset_sync.gemspec
index 5651b5a..049937f 100644
--- a/asset_sync.gemspec
+++ b/asset_sync.gemspec
@@ -6,12 +6,12 @@ require "asset_sync/version"
 Gem::Specification.new do |s|
   s.name        = "asset_sync"
   s.version     = AssetSync::VERSION
-  s.date        = "2011-08-30"
+  s.date        = "2011-11-05"
   s.platform    = Gem::Platform::RUBY 
   s.authors     = ["Simon Hamilton", "David Rice"]
   s.email       = ["shamilton@rumblelabs.com", "me@davidjrice.co.uk"]
   s.homepage    = "https://github.com/rumblelabs/asset_sync"
-  s.summary     = %q{Synchronises Assets between Rails and S3}
+  s.summary     = %q{Synchronises Assets in a Rails 3 application and S3/Cloudfront}
   s.description = %q{After you run assets:precompile your assets will be synchronised with your S3 bucket, deleting unused files and only uploading the files it needs to.}
 
   s.rubyforge_project = "asset_sync"
diff --git a/lib/asset_sync/config.rb b/lib/asset_sync/config.rb
index 6162fdf..8735f68 100644
--- a/lib/asset_sync/config.rb
+++ b/lib/asset_sync/config.rb
@@ -9,6 +9,7 @@ class Invalid < StandardError; end
     attr_accessor :aws_bucket
     attr_accessor :aws_region
     attr_accessor :existing_remote_files
+    attr_accessor :gzip_compression
 
     validates :aws_access_key,        :presence => true
     validates :aws_access_secret,     :presence => true
@@ -19,9 +20,14 @@ def initialize
       self.provider = 'AWS'
       self.aws_region = nil
       self.existing_remote_files = 'keep'
+      self.gzip_compression = false
       load_yml! if yml_exists?
     end
 
+    def gzip?
+      self.gzip_compression
+    end
+
     def existing_remote_files?
       (self.existing_remote_files == "keep")
     end
@@ -45,6 +51,7 @@ def load_yml!
       self.aws_bucket             = yml["aws_bucket"] if yml.has_key?("aws_bucket")
       self.aws_region             = yml["aws_region"] if yml.has_key?("aws_region")
       self.existing_remote_files  = yml["existing_remote_files"] if yml.has_key?("existing_remote_files")
+      self.gzip_compression       = yml["gzip_compression"] if yml.has_key?("gzip_compression")
 
       # TODO deprecate old style config settings
       self.aws_access_key         = yml["access_key_id"] if yml.has_key?("access_key_id")
diff --git a/lib/asset_sync/storage.rb b/lib/asset_sync/storage.rb
index f78b202..0c65343 100644
--- a/lib/asset_sync/storage.rb
+++ b/lib/asset_sync/storage.rb
@@ -54,13 +54,46 @@ def delete_extra_remote_files
     end
 
     def upload_file(f)
-      STDERR.puts "Uploading: #{f}"
-      file = bucket.files.create(
-        :key => "#{f}",
+      # TODO output files in debug logs as asset filename only.
+      file = {
+        :key => f,
         :body => File.open("#{path}/#{f}"),
         :public => true,
         :cache_control => "max-age=31557600"
-      )
+      }
+
+      gzipped = "#{path}/#{f}.gz"
+      ignore = false
+
+      if config.gzip? && File.extname(f) == ".gz"
+        # Don't bother uploading gzipped assets if we are in gzip_compression mode
+        # as we will overwrite file.css with file.css.gz if it exists.
+        STDERR.puts "Ignoring: #{f}"
+        ignore = true
+      elsif config.gzip? && File.exists?(gzipped)
+        original_size = File.size("#{path}/#{f}")
+        gzipped_size  = File.size(gzipped)
+
+        if gzipped_size < original_size
+          percentage = ((gzipped_size.to_f/original_size.to_f)*100).round(2)
+          ext = File.extname( f )[1..-1]
+          mime = Mime::Type.lookup_by_extension( ext )
+          file.merge!({
+            :key => f,
+            :body => File.open(gzipped),
+            :content_type     => mime,
+            :content_encoding => 'gzip'
+          })
+          STDERR.puts "Uploading: #{gzipped} in place of #{f} saving #{percentage}%"
+        else
+          percentage = ((original_size.to_f/gzipped_size.to_f)*100).round(2)
+          STDERR.puts "Uploading: #{f} instead of #{gzipped} (compression increases this file by #{percentage}%)"
+        end
+      else
+        STDERR.puts "Uploading: #{f}"
+      end
+
+      file = bucket.files.create( file ) unless ignore
     end
 
     def upload_files
diff --git a/lib/asset_sync/version.rb b/lib/asset_sync/version.rb
index b713a98..917fbbb 100644
--- a/lib/asset_sync/version.rb
+++ b/lib/asset_sync/version.rb
@@ -1,3 +1,3 @@
 module AssetSync
-  VERSION = "0.1.8"
+  VERSION = "0.1.9"
 end
diff --git a/lib/generators/asset_sync/templates/asset_sync.rb b/lib/generators/asset_sync/templates/asset_sync.rb
index 2a24e5f..9634cbc 100644
--- a/lib/generators/asset_sync/templates/asset_sync.rb
+++ b/lib/generators/asset_sync/templates/asset_sync.rb
@@ -2,6 +2,9 @@
   config.aws_access_key = ENV['AWS_ACCESS_KEY']
   config.aws_access_secret = ENV['AWS_ACCESS_SECRET']
   config.aws_bucket = ENV['AWS_BUCKET']
-  # config.aws_region = "eu-west-1"
   config.existing_remote_files = "keep"
+  # Increase upload performance by configuring your region
+  # config.aws_region = "eu-west-1"
+  # Automatically replace files with their equivalent gzip compressed version
+  # config.gzip_compression = true
 end
\ No newline at end of file
diff --git a/lib/generators/asset_sync/templates/asset_sync.yml b/lib/generators/asset_sync/templates/asset_sync.yml
index 9770f2a..8213020 100644
--- a/lib/generators/asset_sync/templates/asset_sync.yml
+++ b/lib/generators/asset_sync/templates/asset_sync.yml
@@ -1,27 +1,30 @@
 defaults: &defaults
-  access_key_id: "<%= aws_access_key %>"
-  secret_access_key: "<%= aws_access_secret %>"
+  aws_access_key: "<%= aws_access_key %>"
+  aws_access_secret: "<%= aws_access_secret %>"
   # You may need to specify what region your S3 bucket is in
-  # region: "eu-west-1"
+  # aws_region: "eu-west-1"
   existing_remote_files: keep
+  # Automatically replace files with their equivalent gzip compressed version
+  # gzip_compression = true
+
 
 development:
   <<: *defaults
-  bucket: "<%= app_name %>_development"
+  aws_bucket: "<%= app_name %>_development"
   # Existing pre-compiled assets on S3 will be kept
   # existing_remote_files: keep
 
 test:
   <<: *defaults
-  bucket: "<%= app_name %>_test"
+  aws_bucket: "<%= app_name %>_test"
 
 staging:
   <<: *defaults
-  bucket: "<%= app_name %>_test"
+  aws_bucket: "<%= app_name %>_test"
 
 production:
   <<: *defaults
-  bucket: "<%= app_name %>_production"
+  aws_bucket: "<%= app_name %>_production"
   # Existing pre-compiled assets on S3 will be deleted
   # existing_remote_files: delete 
 
diff --git a/spec/asset_sync_spec.rb b/spec/asset_sync_spec.rb
index 1a81aa1..0707790 100644
--- a/spec/asset_sync_spec.rb
+++ b/spec/asset_sync_spec.rb
@@ -39,6 +39,10 @@
     AssetSync.config.existing_remote_files.should == "keep"
   end
 
+  it "should default gzip_compression to false" do
+    AssetSync.config.gzip_compression.should be_false
+  end
+
 end
 
 
@@ -69,6 +73,10 @@
     AssetSync.config.existing_remote_files.should == "keep"
   end
 
+  it "should default gzip_compression to false" do
+    AssetSync.config.gzip_compression.should be_false
+  end
+
 end
 
 describe AssetSync, 'with no configuration' do
@@ -82,4 +90,18 @@
     lambda{ AssetSync.sync }.should raise_error(AssetSync::Config::Invalid)
   end
 
+end
+
+describe AssetSync, 'with gzip_compression enabled' do
+
+  before(:all) do
+    Rails.root = 'without_yml'
+    AssetSync.config = AssetSync::Config.new
+    AssetSync.config.gzip_compression = true
+  end
+
+  it "config.gzip? should be true" do
+    AssetSync.config.gzip?.should be_true
+  end
+
 end
\ No newline at end of file